Retrenchments: Why early disclosure may do more harm than good – Commentary

Source: Straits Times
Article Date: 29 May 2026

Advance retrenchment notification could lock in decisions too early and make job losses harder to avert.

The recent parliamentary debate on “no jobless growth” amid artificial intelligence disruption has revived a proposal from the labour movement: NTUC secretary-general Ng Chee Meng has called for advance notification of retrenchments to the Government before the employee’s last working day. This is being studied in the ongoing review of the Employment Act.

The proposal is understandable. Workers should not be left blindsided. Recent cases have exposed how badly things can go when retrenchments or closures are handled poorly. When Twelve Cupcakes closed abruptly, about 80 workers were affected, with employees saying they had little or no warning. In Lazada’s layoffs, the union was reportedly not notified or consulted.

The labour movement’s argument is simple: If the system knows earlier, help can start earlier. But mandatory advance retrenchment notification is neither clearly pro-worker nor pro-business.

We already have a Mandatory Retrenchment Notification (MRN) framework. Employers with at least 10 employees must file an MRN with the Ministry of Manpower within five working days after informing employees of retrenchment. This allows support to be activated quickly through job matching and training assistance.

The new proposal is not about whether employers should notify the authorities, but when they should notify. We should not move the trigger from after employees are told to before they are told.

Today, Singapore’s framework is tied to when employees are notified. In other systems, notification is more often linked to the employees’ last working day. In practice, however, many notifications here are already submitted well before the last working day, allowing support to be activated ahead of separation. In 2025, 77 per cent of MRNs were submitted at least seven days ahead of the employee’s last working day and 73 per cent were submitted at least two weeks ahead.

The key change is therefore not simply earlier notification, but a shift in when the system intervenes and how support is triggered alongside firms’ restructuring processes.

In other jurisdictions, such requirements sit within wider systems of statutory consultation, formal worker representation and slower labour market adjustment. Those societies accept greater rigidity as part of their model of worker protection. Notification to the authorities would take place while restructuring decisions are still being formed, rather than after they are communicated.

Singapore operates in a different context. We are a small, highly open economy: more exposed to external shocks, more dependent on business confidence, and more reliant on agility, especially among small and medium-sized enterprises (SMEs).

The risk of locking decisions in too early

Earlier notification does not automatically translate into a better outcome for workers.

Retrenchment is rarely a company’s first choice. Before any layoffs happen, companies often spend considerable time trying to avoid them. They may explore redeployment, redesign jobs, cut other costs, renegotiate contracts, seek bridge financing, or look for buyers or partners.

A mandatory pre-notification can force these decisions to harden too early. Once an employer must officially notify in advance, the restructuring process may become more fixed and less reversible. A company that might otherwise have bought time to save some roles could be pushed into formalising job cuts sooner.

In one recent closure in the food and beverage sector, the company explored all options till the very end and eventually managed to negotiate a deal for parts of its business to continue under a new operator. Credit terms were renegotiated and operations were partially preserved. Jobs that looked lost were saved.

A rigid pre-notification regime risks reducing that room for manoeuvre. If the result is that layoffs happen earlier, or become harder to avoid, workers are not better protected. They are simply retrenched under a more formal process.

Furthermore, restructuring plans are often commercially sensitive. This is especially the case for firms dealing with lenders, investors, major customers or competitive bids. Premature disclosure can unsettle markets, damage negotiations, alarm customers and trigger talent flight.

An advance notification regime could therefore create the worst of both worlds: more people know that trouble is brewing, while affected employees themselves may still not have clear answers.

In a small labour market like Singapore’s, rumours travel quickly. Once uncertainty spreads, it rarely stays contained. Workers start worrying. Teams become distracted. Customers lose confidence. Suppliers tighten terms. The firm weakens further.

That is not worker protection. That is worker anxiety on a larger scale. And if the business deteriorates further because confidence collapses too early, even more jobs may ultimately be lost.

SMEs most vulnerable

Singapore’s economy is also not made up only of large multinationals with deep human resources and legal teams. It also includes many SMEs navigating volatile conditions with limited resources. For them, a blanket advance notification rule would not be a minor procedural tweak. It would be another layer of complexity at precisely the moment they are under the greatest strain.

That matters in Singapore, where SMEs form the backbone of the economy, employing 70 per cent of the workforce. A system that becomes more rigid, more administratively demanding and more legalistic may end up weakening the very enterprises that still employ most workers.

It could also have unintended consequences. Today, about 90 per cent of resident employees are still in permanent employment, while the remainder are on contract or in casual roles. But that balance is under pressure. A ManpowerGroup Singapore outlook for 2026 notes that firms are increasingly planning to build leaner permanent cores, supplemented by contract, project-based and freelance workers, as a way to manage volatility and costs.

If retrenchment for permanent staff becomes more procedurally onerous, companies may lean more heavily on short-term contracts, freelance arrangements or internships that fall outside formal retrenchment requirements. That may slow the creation of permanent jobs over time, leaving more workers cycling through temporary roles – an outcome that weakens, rather than strengthens, job security.

The current system is not broken

There is room to improve the present framework. But there is little evidence that it is broken. Compliance with MRN requirements is already high. Many notifications are also received well before the employees’ last working day, allowing support to be activated ahead of separation.

The current system strikes a balance that suits a small open economy. It gives the authorities visibility, activates support for affected workers, preserves space for companies to explore alternatives, and allows unions and tripartite partners to step in where needed.

We should preserve this balance. Rules that are too loose can leave workers exposed. But rules that are too rigid can do damage too – by reducing business agility, weakening confidence and ultimately making job losses more likely.

Singapore has regularly topped the IMD World Competitiveness Ranking with our strong standing in labour market competitiveness and business efficiency, reflecting the high opinion investors have of our labour market flexibility. It is part of what keeps investment here and sustains good jobs.

These perceptions matter because they influence where multinationals place regional teams, where they expand, and where they commit for the long haul. If that edge is eroded because of policies that increase rigidity for companies to make workforce adjustment, it could lead to smaller permanent teams, more contract-based hiring, regional roles located elsewhere and expansion plans broken into shorter, lower commitment projects.

If the goal is to help workers earlier, there are more practical ways to do so.

First, shorten the current notification window for larger employers. Reducing the filing period from five working days to two would accelerate activation of support while preserving confidentiality during fragile restructuring discussions.

Second, require a minimum “Day Zero” transition protocol once the retrenchment notice is given. This could include a standard information pack on benefits and claims, scheduled career coaching within 48 hours, and direct referral pathways to job matching and training support.

Third, strengthen early voluntary engagement mechanisms that already exist. Employers can today seek help early from agencies such as Workforce Singapore and NTUC e2i. That channel can be made easier, faster and more attractive without forcing companies to formalise decisions prematurely.

These are more targeted solutions. They improve speed of support without locking firms into decisions too early, and without importing the rigidity of foreign systems that operate in very different labour market contexts.

Singapore’s labour market model has not been built on rigid process for its own sake. Our strength lies in pragmatism, trust and speed. Protect workers, yes. But do so in a way that also preserves the ability of firms to adapt, recover and save jobs where possible.

Mandatory advance retrenchment notification sounds compassionate. But it risks becoming the opposite: earlier lock-in, wider uncertainty, higher compliance burdens, and weaker confidence.

If we want to do more for displaced workers, we should focus on what matters most: faster activation of help, stronger transition support from Day Zero, and firmer action against irresponsible employers. That would be more effective than making the system more rigid.

Kok Ping Soon is CEO of the Singapore Business Federation.